Healthcare M&A Rethink: Tips For Healthcare Payers Seeking To Maximize M&A Deal Value

Success in healthcare M&A strategies will require a new approach.

US healthcare reform is changing payer merger and acquisition strategies, but success will require a new approach. Accenture research reveals that until recently, US payer acquisitions have focused largely on consolidating back-office functionality while retaining the member base. Reflecting today’s new healthcare reform-influenced environment, a large majority of payer deals are now made with an eye toward building capabilities beyond the payer core.

While such deals might make good business sense, they demand a different kind of integration. As payers enter adjacent markets or build new capabilities they need to apply a disciplined and rigorously executed approach in order to capture the most value possible. This article examines how successful integration programs typically seek to capitalize on new synergies and to align member experience across the payer’s expanded portfolio of new and traditional core capabilities.

While past deals sought cost-related synergies through actions such as back-office consolidation, these new acquisitions will likely find most opportunities on the revenue side. Examples include the cross-sale of products such as voluntary benefit plans to existing members; new product bundles and pricing strategies; or efforts to attract new members and retain existing ones with a focus on lower medical spending or improved health outcomes.

Payers can also work to expand member experience touch-points beyond the traditional explanation of benefits and annual renewal interactions. For example, acquisitions in the provider or health and wellness spaces can not only increase the number of potential member touch points, but also positively change the way payers can interact with members. However, designing these interactions or improving reported satisfaction within a provider environment could pose new challenges to conventional payers.

For payers, examining Hospital Consumer Assessment of Health Providers and Systems scores and related patient satisfaction initiatives may require a new skill set in addition to existing payer capabilities.

Over time, payers that expand their services and offerings have a unique opportunity to change member behaviors in positive ways. The enhanced use of data, for example, can increase a payer’s predictive abilities. Both provider and health and wellness acquisitions offer opportunities for enhanced data flows, and enable payers to incorporate health analytics insights into clinical reviews and intervention protocols.

Companies can also cultivate superior coaching and advice capabilities, using scripting or technology-enabled prompts to take advantage of the additional member touch-points made possible from the acquisitions.

Payers attempting to maximize M&A deal value should rigorously examine and design the member experience in ways that balance the following considerations:

• Branding: What level of branding or co-branding is appropriate, and how would co-branding efforts affect the acquisition’s existing core business?

• Key messages: With the potential to interact with patients much more frequently, what are the one or two key messages to emphasize? How will these messages vary by member/patient segments?

• Supporting technology: Which systems should allow data sharing? Other issues include the need for database partitions, telephony interoperability and hosted Web functionality. Payers should also unify the online appearances of different company entities while maintaining compliance with the Health Insurance Portability and Accountability Act.